Reddit has recently become the protagonist in an ongoing saga pitting retail investors against Wall Street hedge funds, a battle which hasmade some small investors millionaires overnight.
In particular, the battlefield was the r/wallstreetbets subreddit, which has shown skyrocketing growth in the past couple of days as retail investors flew to the platform driven by FOMO, media coverage, and word-of-mouth enthusiasm.
Long story short, retail investors started to coordinate long positions over a series of stocks that were shorted by big Wall Street hedge funds, squeezing their short positions and forcing them to double down on them, driving the price of these stocks further up.
Four stocks were the main protagonists of the last couple of days, momentarily supplanting Facebook, Apple, Netflix, and Google as the new FANG stocks:
- F: Fubo TV (+38.42% over the past 7 days)
- A: AMC Entertainment (+385% over the past 7 days)
- N: Nokia (+41.87% over the past 7 days)
- G: GameStop (+644.33% over the past 7 days)
GameStop, whose shares were worth $19.95 on Jan 12th 2021, was trading at $371.82 on Jan 27th 2021 as retailers kept opening and holding long positions, frequently announcing their moves through the above-mentioned subreddit. Stratospheric returns were freely posted on the channel during the day:
Billionaire investor Chamath Palihapitiya commented: “This retail phenomenon is here to stay. There are 2.7M people inside wallstreetbets. I think they are as important as any hedge fund or collection of hedge funds.”
Could this be predicted? Could it be anticipated?
Well, by taking a look at the spike in activity of that subreddit in the past couple of days we can definitely see that something was going on.
What were people talking about? Could we know in advance which stocks were the most likely to experience dramatic price action?
We analyzed every comment and submission since the beginning of January to find trends in the data. GME (symbol for GameStop) started becoming a hot topic around January 15th/17th, trading at around $35/share prior to showing significant increases in mentions across comments and submissions.
By January 26th, the trend was nothing short of obvious:
Billionaire cryptocurrency investor and Gemini exchange founder Tyler Winklevoss suggested GameStop’s CEO purchase Bitcoin and put them on the company balance sheet. 😎
While this is purely fact reporting, we believe that social media plays a big role in influencing market sentiment, especially the cryptocurrency market.
For these reasons, at AnChain.AI we started analyzing social media data to be able to predict in advance trends and price swings of the major cryptocurrencies.
What are people talking about on Reddit and Twitter? Are people searching on Google and Wikipedia any particular keywords related to the crypto world?
Your questions have an answer on our recently launched QTF platform.
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